How to Get Corporate Credit Without Personal Guarantees

by Owen E. Richason IV

1. Get a credit card in the business's name. Apply for a business credit card with a low credit limit. Consider all corporate credit card offers, and compare the various credit card companies' terms and fees. If necessary, get a secured business credit card that reports to each credit bureau along with the business credit reporting agency Dun and Bradstreet. Use the credit card sparingly and make payments on time, every time.

2. Apply for a third-party guaranteed loan. Many municipalities and counties extend small business loans that guarantee a third party will pay 10 percent to 20 percent of the loan should the borrower default. The Small Business Administration offers different types of guaranteed loan programs to small businesses. These loans are relatively small and are awarded to businesses revitalizing an area or contributing to environmental or technological innovation.

3. Save some of the loan money. Set aside 20 percent to 30 percent of the guaranteed loan monies to use in repaying the

loan on a timely, consistent basis. These monies are considered retained or accumulated earnings by the Internal Revenue Service and are taxed, but the price is worth paying to build your company's credit score. Use the accumulated or retained earnings to pay back the loan to establish corporate credit over the next three to five years.

4. Apply for corporate credit without a personal guarantee. Seek a business loan from one of the SBA's approved lenders in your area. Apply for the loan in person with the commercial loan department manager. Have documentation such as personal and business credit reports to provide proof of good personal and business credit. Seek a small loan, fill out an application and return it directly to the commercial loan department manager for approval.

Establishing your business's credit will take about three to five years of making on-time payments to commercial lenders.

Commercial lenders extending loans without a personal guarantee may still require collateral such as equipment or inventory.